A few days old but explains a lot!:

New Uranium Fund Signals Start of Bull Run Amid Tight Supply

By

Yvonne Yue Li

,

Will Wade

, and

Aoyon Ashraf

14 September 2021, 06:06 GMT+10 Updated on 14 September 2021, 11:43 GMT+10

• Piquard of Horizons says prices could rally a further 40%
• Sprott Physical Uranium Trust is sparking buying frenzy

A new uranium fund that’s snapping up supplies signals the start of a lasting bull run for the commodity used to power nuclear plants.

That’s the view of Nick Piquard, a portfolio manager at Horizons ETFs, who expects prices to soar above $60 a pound in the coming months. That would be about 40% higher from where futures are currently trading in New York.

The Sprott Physical Uranium Trust started buying the commodity on the spot market in mid-August and has amassed over 24 million pounds of uranium, equivalent to about 14% of global reactor consumption. That’s “accelerated the timetable” of a potential bull market by a year or two by locking up a large chunk of supply just as demand prospects are improving, Piquard said in an interview.

“Supply is coming down significantly,” he said. “There’s now reaffirming of the demand side. There isn’t any other reason that uranium shouldn’t be in a bull market.”

Uranium’s demand outlook is improving amid optimism that nuclear could play a part in a global push for a clean energy future. That, along with the start of the Sprott fund, has pushed futures up more than 40% from this year’s low in August. A buying frenzy in uranium companies sent those stocks to their highest levels in a decade.

There are 54 reactors under construction worldwide, the lowest since the 2011 earthquake and tsunami in Japan that prompted countries around the world to rethink their approach to nuclear energy, according to BloombergNEF. Investors like Sprott are betting that the global effort to curb climate change will lead to a revival in carbon-free nuclear energy and drive up demand for uranium.

Concerns over big inventories also weighed on the market. The Sprott buying is removing that concern, Piquard said.

“The big bear case is that there’s too much inventory after Fukushima shut down and how much there’s inventory out there. We’re getting rid of one of the inventories, and the bear case kind of falls part,” he said.